Strategic Management and Finance Research Paper

Strategic Management and Finance - Research Paper Example 1,670,000 Net cash flow per year 690,000610,0001,350,0001,505,0001,670,000 Net Present Value: Present Cash Flows PV Factors Value Year 1 690,000 0.8929616,071 Year 2 610,000 0.7972486,288 Year 3 1,350,000 0.7118960,903 Year 4 1,505,000 0.6355956,455 Year 5 1,670,000 0.5674947,603 Salvage return 700,000 0.5674397,199 Total 4,364,519 Investment (10,000,000) Net Present Value (5,635,481) Payback Period: Net Remaining Cash Flow Investment Payback period is Longer than the project life of 5 years Investment 10,000,000 Year 1690,0009,310,000 Year 2 610,0008,700,000 Year 3 1,350,0007,350,000 Year 4 1,505,0005,845,000 Year 5 2,370,0003,475,000 Scheme 2 Net Cash Flow per Year Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Expected annual cash receipts from sales2,600,0002,800,0003,000,0003,200,0003,500,0003,500,000 Expected annual costs of new product Cash expenses 1,550,0001,620,0001,720,0001,810,0001,930,0002,060,000Depreciation expense 583,333583,333583,333583,333583,333583,333 Net income 466,667596,667696,667806,667986,667856,667 Net cash flow per year 466,667...The reduction in the inventory turnover resulted from the significant increase in the stocks. This increase might be a result of the company's hedging for foreseen price increases. The Board should accept Scheme 2. Based on NPV, it has a much lower negative NPV than Scheme 1. Moreover, it has a shorter payback period than Scheme 2, which according to the above calculations will never be able to pay back the company's 10,000,000 investment. PT Trada Maritimes debuted in the Indonesia Stock Exchange on September 2, 2008 (Trada Maritime 2008). Right after its debut, the stock price reached as high as 27 per cent of its IPO price. The company went public as a result of its additional capital requirements on its expansion plan for 2009. Trada Maritimes plans to spend as much as $315 million to purchase additional vessels over the next five years (Trada Maritime 2008). Globus Maritime Limited received the International IPO of the Year on February 1, 2008 at the Quoted Company Awards (Reuters 2008). Globus was first listed in the London Stock Exchange under its AIM index in June 2007 at an IPO price of 300 pence (www.timagenislaw.com; www.investegate.co.uk). Right after its debut, the price of the company's stock skyrocketed as show in the graph below. Reuters 2008, 'Globus Maritime Limited Receives the 'International IPO of the Year' at the Quoted', Reuters, [Online] Retr